A consignment agreement is the contract between someone who owns goods and someone who will sell them on their behalf. The owner — the consignor — hands stock to a retailer, gallery, or dealer — the consignee — who displays and sells it, keeps an agreed share of the proceeds, and returns whatever doesn’t sell. The free templates below are editable MS Word files, and beneath them every key clause is explained, including the two that decide what happens when things go wrong.

The One Thing That Defines Consignment

Ownership stays with the consignor until the goods are sold to a customer. The consignee never buys the stock — they hold it, display it, and sell it on the owner’s behalf, taking a share of the proceeds rather than a trading margin on goods they own.

Everything legally distinctive about consignment follows from that. The retailer takes no inventory risk and pays nothing upfront, which is why consignment is attractive to shops trying new products. The owner keeps the risk of unsold stock, which is why the agreement has to be specific about what happens to goods that sit unsold, get damaged, or are still on the shelf when the shop closes.

Key Clauses in a Consignment Agreement

1. The parties. Full legal names of consignor and consignee, and the addresses where the goods will be held.

2. Title and ownership. State plainly that title remains with the consignor until sale, that the consignee holds the goods as bailee, and that consigned stock is not the consignee’s property or available to their creditors. This clause is short and it’s the foundation of the whole document.

3. The consigned goods — with a schedule. Don’t describe the stock in a paragraph; attach an itemized schedule (see the example below) listing each item, its condition, the agreed retail price, and the date received. Both parties sign it, and it’s updated as goods are added or returned.

4. The split. How proceeds divide — commonly stated as percentages, for example 60% to the consignor and 40% to the consignee in retail, with galleries and specialist dealers often taking more. State whether the split is calculated on the gross sale price or net of card processing fees and sales tax; that detail moves real money. Where the arrangement is commission-based rather than a split of proceeds, our commission agreement templates cover the alternative structure.

5. Pricing authority. Who sets the retail price, and — the part that causes arguments — whether the consignee may discount, run a sale, or mark stock down without the consignor’s consent. Many agreements permit markdowns after a stated period, which is fine as long as it’s written down.

6. Risk of loss and insurance. Who bears the loss if goods are stolen, damaged, or destroyed while in the consignee’s possession, and who insures them for what value. Because the consignor still owns the stock but the consignee controls it, this can’t be left to assumption — name the responsible party and the insured value.

7. Reporting and payment. How often the consignee reports sales, what the report shows, and when the consignor is paid — for example, within 15 days of each month end for items sold in that month. Add the right to a statement even in months with no sales.

8. Inspection rights. The consignor’s right to visit and count stock on reasonable notice. Without it, the only record of what’s still on the shelf is the consignee’s.

9. Term, returns, and freight. How long goods stay on consignment, what happens to unsold items at the end, how much notice either side gives, and — a detail routinely omitted — who pays return shipping.

10. Insolvency of the consignee. If the shop goes under, consigned goods can be caught up with the retailer’s own inventory and claimed by their creditors, despite the ownership clause. Protecting against that generally requires more than a contract term: in the US it typically means filing a UCC-1 financing statement and giving notice to secured creditors; other jurisdictions have equivalent registration mechanisms. If you’re consigning significant value, take advice on the steps that apply where you are — this is the point at which a well-drafted agreement alone isn’t enough.

11. Termination and governing law. Notice periods, what triggers immediate termination, and which jurisdiction’s law applies.

The Inventory Schedule

The schedule is what a consignment relationship actually runs on. Both parties sign it when goods change hands, and it’s reconciled at each payment:

Consignment Agreement Structure at a Glance

Free Consignment Agreement Templates in MS Word

Each template below is editable in Word. Before signing: attach a signed inventory schedule, state the split basis, and settle who insures the goods.

Retail Consignment Agreement Template

For shops and boutiques selling goods on behalf of makers and suppliers — split, pricing, reporting, and return of unsold stock.

Art Consignment Agreement Template

For galleries and artists — includes condition recording, insurance while on display, and restrictions on discounting works.

Types of Consignment Arrangement

• Retail consignment — boutiques, gift shops, and second-hand stores selling stock they don’t own. Splits commonly run 50/50 to 60/40 in the consignor’s favor, and agreements usually set a period after which unsold goods are returned or marked down.
• Art and gallery consignment — galleries showing artists’ work. Condition reporting matters more here than anywhere else, insurance is usually the gallery’s obligation while work is on display, and the agreement often restricts discounting without the artist’s consent.
• Vehicle consignment — a dealer selling a car on the owner’s behalf. Registration, insurance during the sale period, and test-drive responsibility all need addressing; where the sale completes, a purchase agreement or bill of sale documents the transfer to the buyer.
• Wholesale or vendor-managed consignment — a supplier placing stock in a retailer’s warehouse or shelves, paid only as units sell. Common in grocery, publishing, and parts distribution, and the arrangement where insolvency protection matters most because of the values involved.

Frequently Asked Questions

What is a consignment agreement?

A contract under which one party (the consignor) provides goods to another (the consignee) to sell on their behalf. The consignee keeps an agreed share of the sale price and returns unsold goods; ownership stays with the consignor until each item sells.

Who owns goods that are on consignment?

The consignor, until the moment the item is sold to a customer. The consignee holds and sells the goods but never buys them, which is what distinguishes consignment from wholesale.

What is a typical consignment split?

In retail, 60/40 or 50/50 in the consignor’s favor is common; galleries and specialist dealers often take a larger share. What matters as much as the percentage is whether it’s calculated on the gross sale price or net of card fees and tax — say which in the agreement.

Who is responsible if consigned goods are damaged or stolen?

Whatever the agreement says — and it should say. Because the consignor owns the goods while the consignee controls them, responsibility for care and the obligation to insure need to be assigned explicitly, along with the value insured.

What happens to my goods if the shop goes out of business?

This is the real risk in consignment. Consigned stock can be treated as part of the retailer’s inventory and claimed by their creditors unless the consignor’s interest has been properly protected — which usually requires a registration step beyond the contract itself, such as a UCC-1 filing in the US. If the value is significant, take advice on what’s required where you are before delivering stock.

Who decides the selling price?

Normally the consignor sets the retail price and the agreement states whether the consignee may discount or mark down — often permitted only after a stated period, or with written consent. Leaving pricing authority unstated is a common cause of disputes.